Lets Talk Money

June 07th, 2025. 

Episode Transcript

Speaker 1 (00:02):
Good morning everyone, Thank you for joining me on this
rainy Saturday. My name is Harmony Wagner. I'm a wealth
advisor at Bouchet Financial Group. I've been with the team
for coming up on nine years at the end of
the summer. I'm a Certified Financial Planner or CFP and
also a Certified Private Wealth Advisor or cpw A. And
I just have to say, I really enjoy working with clients.

(00:24):
I love my job. I love when I get to
come and chat with our radio listeners on a Saturday morning,
and especially on the rainy ones. You know, nothing nicer
than just sitting down with a cup of coffee or
tea and uh, staying inside and listening to a nice,
a nice radio chat. So hopefully you know, we know
the rainy Saturday here unfortunately, but hopefully you're somewhere just enjoying,

(00:47):
enjoying the show, enjoying the day. Uh. You know, I
always say this, but in my opinion, these these months
are the nicest that we have in the Northeast, and
rain or not, we've got to try to enjoy it.
I'm sure many of you have probably seen that statistic
that's flowed around about how we haven't had a dry
weekend since mid November, which which has to be a
record of some kind. So I think we're going to

(01:07):
continue that streak this weekend, but hopefully we can we
can snap it sometime soon. But enough about that, you know,
let's shift gears to something more positive, which was the
markets this past week. But before I get into that,
I do just want to remind everybody that the phone
lines are open as well as our email inbox. So
there's two ways if you have questions or things you
want to talk about the show today that you can

(01:29):
get my attention. So you give me a call at
one eight hundred talkwg Y. That's one eight hundred eight
two five five nine four nine. You can also send
an email if you prefer so that addresses ask ask
Bouche b O U C H E Y at Bouchet
dot com. So if you prefer to write it down
and send it that way, or you're not in a

(01:51):
place where you can make a call, please go ahead
and utilize that. I'll do my best of field whatever
questions you might have. And you know, if you're thinking it,
chances are other listeners are things it too, So there
are no foolish questions. Please call in. I'd love to
hear whatever is on your mind. Let's start out with
the market recap. So it was a positive week for
all the major indexes. The S and P in particular

(02:13):
are crossing over a milestone that we haven't seen since February. So,
you know, as much as the decline was fast and furious,
especially in April, you know, we saw double digit losses
in a very short period of time, but we're seeing
the market's clawback. The markets are rallying. They are not
quite back to their all time highs from February, but

(02:35):
they are up for the year. So as of this
past week, the S and B five hundred was up
one point seven percent for the week, which brings it
to two point twenty five percent for the year. NASDAK
up almost two and a half percent on the week
and closing in on one point three percent for the year,
and the Dow up as well, right about one percent

(02:56):
for the week and just a hair under that for
the year, so you know, at markets are back in
the green for the year. And actually this past week
the Russell two thousand, which tracks small caps, was up
three point two percent, So the biggest winner on the
week there, and so we just saw a lot of positivity,
especially on Friday, was a strong session. The S ANDP

(03:16):
jumped after a strong jobs report. We had one hundred
and thirty nine thousand jobs added that was stronger than expected,
and the SMP closed above six thousand for the first
time since February. So the market high was around sixty
one forty, and so we're closing it at six thousand.
This week. We were nearing that all time high from

(03:36):
just a few months ago, although it feels like a
lot has happened since then, so real positive things going
out of the markets right now. You know what's driving it?
Like I said, the jobs report was strong, you know,
I think the reason for a lot of the volatility.
Of course, it was the trade war, but more than that,
it was worries about are these tariffs going to cause
a recession? And I think that was what was on

(03:57):
most people's minds, and you know, it was driving a
lot of that. If we see a period where inflation
spikes up, especially when rates are already you know, elevated,
it doesn't leave much for the Fed to do. You know,
if they try to combat the inflation, well they're going
to hurt the economy even further, and so you kind
of can get into this what's called a stagflationary environment,

(04:20):
which is what we really want to avoid. There's it's
not good for the economy, and it also there's not
much that we could do about it from a policy standpoint,
and that creates a real difficult situation. So that was
really what the worries were, you know, driving a lot
of the volatility earlier this year, and just a lot
of the uncertainty, not knowing when things were changing, you know,

(04:41):
minute to minute, it seemed like, especially with some of
the tariff talk, that's that can be unsettling for a
lot of people. And we know, we've talked about it
for years, and you know, markets do not like uncertainty.
Markets do not like surprises that they don't want to
feel that, you know, the future is uncertain or in jeopardy.
So we had a lot of volatility and we've seen

(05:05):
that come back, which I think it's nice to come
back so quickly, and investors are feeling good again. And
really we're just seeing, you know, all the signs are
pointing at least right now to an expanding economy. That's
everything that we're seeing is consistent with that narrative, and
so we're not seeing those you know, recession red flags.
Now that can change at any point, right. There definitely

(05:27):
have been times where things can change very quickly. You know,
the trend from the last few months can can shift
in a matter of just you know, the amount of time,
a few months. So it isn't that we're always watching
and the markets are always watching. But you know, right now,
as we're looking at all the indicators, and the labor market,
of course is a big one. When we see you know,
consumer spending, which makes up almost two thirds of our

(05:48):
GDP in the US, it's driven of course by people
having jobs, and big portions about are healthcare and housing. Right.
I think between the two of those it makes up
over thirty percent of the consumer spending. So that's a
really significant part of our economy. And they are not discretionary, right,
as long as people have jobs, they are going to

(06:09):
be paying for those two things. So when the labor
market stays strong, as it has continued to do month
after month, we we they are less worries about the economy.
If people have jobs, people are employed, then they're able
to continue spending and that's going to you know, keep
our economy growing. So all good news really on that front.

(06:29):
From the week in the fixed income market, we saw
the yield on a ten year treasury rise to four
point five oh seven percent. That was up from four
point four one eight last week. Some experts are predicting,
you know, rate cuts before year end. I think we
all know better now than to try to predict what
the Fed will do. But you know, we have seen
inflation come down or see the economy stay strong, so

(06:51):
I think that the general consensus is that there will
be you know, at least one rate cut, possibly multiple
before year end. And on a global standpoint, international markets
are doing really well this year, with some international stock
index funds, just like the Banguard Total International Stock Index
and some other similar ones that just hold you know,
international funds excluding US, but really you know, very broad

(07:13):
based beyond that, That index as well as others, hit
their all time highs this week. So we've seen the
international markets do do quite well this year as well.
You know, I talked about jobs just a minute ago,
and one thing I wanted to point out that I
find interesting, and we look at the labor market, you know,
I personally like to keep tabs on the employment of

(07:34):
population ratio, and I typically focus on what's considered the
prime age group, so that is people between the ages
of twenty five, so old enough that they're probably not
full time students anymore, and younger than fifty four, so
you know, not nearing that retirement time frame where they're
phasing out or stopping work completely. In most cases, that's

(07:54):
kind of the prime age for people to be in
the workforce. And so when we look at that, that
gives us a real good set of you know, what
is the labor force participation rate right now, And as
of May this year, eighty point five percent of people
in those age groups were employed. The only time that
it's ever been higher in our history was in the
late nineties early two thousand, but since then it is

(08:17):
it has been below that. So that is a really
high labor workforce participation rate relatively, and so we're seeing that,
you know, people, I just like the jobs reports and
the unemployment rate. You know, we're seeing that we're staying
at a very good workforce participation rate. And again that's
such a key part of our economy, so you know,

(08:38):
we're seeing this labor market, continue to be dominant, continue
to be strong, and so we're seeing a lot of
indicators pointing to financial health of the US consumer. Uh
I always like to frame you know, the markets in
the economy and more of a you know, what do
we do about it? You know, as individuals, as families,
as households, and so I think now that we've seen

(09:00):
the market recovered to you know, hire a been where
it started the year, closing in on some of those
all time highs, what do we do with that? You know,
Number one, it's a good time to reevaluate your risk tolerance.
And we talk a lot about risk tolerance with our
clients on the show. In our industry in general, you know,
so much of an investor's experience and emotions around investing

(09:22):
are tied to their comfort level with risk and whether
or not their portfolio is aligned with that. When we
sit down with a new client, typically a new client,
although whenever we meet with the client, even if they've
been on for with us for thirty years, you know,
we're talking about, you know, has your risk tolerance changed?
How are you feeling about the way your portfolio is
allocated right now? So it's it's always an ongoing conversation.

(09:43):
And it's why I talk about it so much whenever
I have the pleasure of talking to you on the
radio and when we talk about that conversation. There's really
two components to it, to any person's tolerance for risk,
and we divide into risk capacity and risk appetite. Now,
only you know your risk appetite, that's your comfort level,
how much risk you want to take on, how much

(10:04):
you you know, worry about it. If the markets are down,
do you lose sleep at night? Do you feel confident
they'll come back? You don't sweat it. Maybe you even
want to put cash to work when things seem scary.
You're the one who can judge that and can talk
about how you feel. And even though you know, if
someone wanted to, you know, earn the most money over time,
we would tell them to be very aggressive over a

(10:25):
long term. That is the best way to grow your money.
But peace of mind has a value as well, and
it's not a tangible one, but it's a very important one.
And you know, part of having a good life is
not just having enough finances, but also not stressing about
finances and so making sure that your portfolio is aligning
with how you feel about risk and your comfort level

(10:47):
and your ability to not stress about it is really important.
So that's the part that the client brings to that
discussion is this is my comfort level with risk. The
other component is risk capacity, and that is something where
you may eat I don't sign that from a professional.
That is how much risk you need to take on
or some cases, do not need to take on to

(11:07):
meet your goals. It's a part of a financial planning process.
It's a part of thinking long term, thinking what do
you want to accomplish, what are your assets right now?
And how much growth do you need in your accounts
to meet those goals? And so that that is an
important part of it as well. Right, we may have
a client who comes to us and says, I'm very
risk averse. I would like to be very conservative, you know,

(11:29):
all fixed income or something like that. And you know,
as we go through the financial planning process, we might say, well,
you know, if you want to meet these goals for
your retirement spending, for travel, for a new home, for
a legacy for your heirs, you know you're going to
need more growth in the accounts to do that. And
that is where we you know, come together and help
the clients determine, Okay, you know, do I want to

(11:52):
scale back my goals or do I want to increase
my risk? And what are the trade offs of each
of those. So whenever we go through a market downturn
like we experienced in February March April of this year,
we are always advising clients, hey, this is a gut
check for your risk tolerance. This is where it's tested.
Right when we're coming off of two years of a
bull market, you know, back to back double digit returns

(12:14):
of the market, that's not a good gut check for risk.
That's when people are going to be overly aggressive. When
we have a correction, even when it ends up being
relatively short term like this past one had been, it
is a good time to say, okay, was that really
appropriate for me? Or did I, you know, feel an
undue amount of stress when that happened? And if so,
hopefully you did the right thing at the time and

(12:35):
didn't sell out in April. Hopefully you held the course
since they'd invested. But if you felt that, Okay, I
don't think I'm actually this aggressive now, it would be
a much more opportune time to rebalance. Of course, if
it's in a taxable brokerage acount, you want to be
aware of gains. You don't just want to go through
typically and do a you know, liquidation to get into

(12:55):
a new portfolio allocation, because you're going to be taxed
on that. So you have to be tax aware retirement
accounts like iras roth iras four our one k's that's
not a worry. You're not going to pay taxes on
trades that occur within the account. But with all those
things being being said, you know now is the better time,
right even if you held the course and maybe you
know you were white knuckling it through that period of volatility,

(13:18):
but now is the time. If you had decided then
I need to get more conservative, now's the time to
do so. And it's easy to forget that when the
markets are up, when things are good, when everybody's happy
again and consumer sentiment is back up and the volatility
index is down. That's when we often forget about that
until the next correction. But it is important to find
that long term risk right that you're happy with in

(13:41):
the ups and in the downs, because both ups and
downs are a normal part of being a market investor. Well,
I covered a lot just there. We're going to go
to a quick break, but we'll be right back with more.
Let's talk money on WGY. Don't go away. Thanks for
staying with me through that break. This is Harmony Wagner
joining you on this rainy Saturday morning, and it's it's

(14:02):
great to be with you and spending this hour with
you talking about all things financial markets, the economy. We'll
get into I'm sure some financial planning topics as well
throughout the discussion, but if there's something that you want
to talk about, please feel free to call in. That
phone number is one eight hundred Talk w g Y
one eight hundred eight two five five nine four nine.
And if you also would prefer to email, that's an

(14:24):
option as well. You could email questions to ask Bouche
at bouche dot com. That's ask ask Bouche is b
O U C H E Y at bouche dot com.
Could be a nice way to put a question in
a written format if that's what you prefer. Great. Well,
before the break, we were talking about risk tolerance, and

(14:44):
you know, we are almost halfway through the year at
this point, which is hard to believe, but here we
are in June, and so it can be a good
time to do a midyear review of your finances. That
can connect to the risk tolerance view as I talked about,
so looking at how you're allocated and seeing it that's

(15:05):
still appropriate for you and where you're able to rebalance
it if you need to, and doing it in a
tax efficient way. It can be a good time to
do that. Whether it's in your four oh one K
or maybe you have some accounts that you self manage
those are it's a good time to do that. Some
other things that you might want to do, you know,
as a kind of a mid year check in for yourself.

(15:27):
Maybe not super in depth, but it is always a
good idea to look at the important things like beneficiaries.
You know, on all accounts that you have, So the
more accounts that you have, the more complicated it can be.
I think we'll talk about that a little bit later
in the show, but making sure that you have the
right beneficiaries listed, you know, I can't tell you how
many times I ask a client are your beneficiaries up

(15:48):
to day? And most times they say yes. When we
actually look into it, it's not always the case, and
it just seems to be part of the human condition.
Sometimes we think we did things and we didn't, and
you know, we go to a double check. So checking
beneficiaries on four oh and KS four or three p's,
any accounts that you have elsewhere, I think sure those

(16:11):
are up to date. If you your marital status changed,
if you had, you know, a child born, maybe you
forgot to add them. You just never know. It's always
good to double check if you have it recently. You
can also check and make sure that you're on track
for any savings plans that you had. So I don't
know about anyone else, but for me, when it's you know,
sort of a new year January, first, I get super
motivated to go in and say, Okay, what am I

(16:32):
going to save this year? When am I going to
make my roth contributions? How much am I going to
put in my brokerage account? You know, how much am
I going to say that my kids five twenty nine.
I have all these ideas and I, you know, make
all these plans. But now that we're midway through the year,
it's a good time to check and make sure that
those things are are on track to being accomplished. Right
If you're thinking you're putting in a little bit each
month to your child's five twenty nine plan, make sure

(16:54):
that it's actually what you think it is and that
you're going to hit that goal. Same with same with Wroth,
same with your four oh and pare four three B right.
If you think you wanted to max it out, well
you gotta check because the maximum, you know, often increases
every year, so if you just kept what you had
last year, you might actually maximize it. So a good
time to just check in. It's much easier to make

(17:17):
up ground now as opposed to in December and or
next year when it can be too late for some things.
So you know, just just to kind of a good
mid year check in point to to look at those things.
You don't have to spend a ton of time on it,
but you know, here and there, just to pop into
you know, the different counts you have, make sure they're
allocated right, make sure the beneficiaries are right, and make

(17:37):
sure that anything you thought you were adding to it
in terms of savings is actually being taken care of.
We're gonna go to the phone lines now and chat
with Will from Albany morning. Will, how are you good?

Speaker 2 (17:49):
I'm gonna tell you that I'm good.

Speaker 1 (17:52):
Thank you.

Speaker 2 (17:53):
Yeah, it's it's pretty greaty. I don't driving, but you
may be here more than my boy. My apologies.

Speaker 1 (18:04):
Right.

Speaker 2 (18:04):
So, I've had a lot of experience. I was a
commercial banker, national accounts banker for years, moved up to
the all the area, uh and my WiFi.

Speaker 1 (18:16):
I have a pretty.

Speaker 2 (18:17):
Complex financial picture because mostly because I've done a lot
of the investing insurance, she's you know, not been very experienced.
And the unfortunate thing is that we're planning on splitting
and you know, pretty far into almost from point the retiring.
She's been retired from the Navy for years. And I'm

(18:38):
wondering rather than go to lawyers and asked for financial advice,
they won't give you the best financial advice at all.
I know there's something called the CDFA, but I've looked
around to google how many there are in the area.
I don't know how many of your are.

Speaker 1 (18:53):
How do you.

Speaker 2 (18:53):
About finding one? And should you go with someone who's
not from the area where you live.

Speaker 1 (18:59):
Yeah, that's a great question. And you know, sorry, sorry
to hear of what was going on. You know, we
used to have a CDFA on our staff, Nicole. She
actually sadly passed away earlier this year, but we still
have some folks who can who can help. And I

(19:20):
don't know if there's necessarily any benefit to going to
someone who's outside the area that you live. I think
someone who's close by who can use with their resource
is beneficial. So I don't think that that is necessarily
a draw in my experience, But I do think that,
you know, meeting with the CDFA is a good idea,
a person who is able to give you those kind

(19:42):
of guidance and and yeah, you're right. If you meet
with a lawyer and she meets with a lawyer, then
you know each person is going to try to tell
you what's best for you individually, but they may not
be able to look at the whole picture. So so
I haven't been it's a good idea to seek out
a CDFA. Let me do a little research, you know,
it's you'd like to call into our office earlier this
next time this week. I could. I'd be happy to,

(20:05):
you know, get you a name. I don't have any
off the top of my head that I might be
able to find some cdfhase that could maybe assist in
your situation.

Speaker 2 (20:13):
I appreciate it.

Speaker 1 (20:14):
Again.

Speaker 2 (20:14):
Your name was, my.

Speaker 1 (20:16):
Name's Harmony Wagner.

Speaker 2 (20:18):
Harmony, Okay, Harmony.

Speaker 1 (20:20):
Yeah.

Speaker 2 (20:20):
I'll give you call the.

Speaker 1 (20:22):
Week and.

Speaker 2 (20:24):
I'll drop my number if you want to give a
call your office. So many terrible news about dataly I
rarely do you still let you guys?

Speaker 1 (20:32):
Yeah, yeah, I know. It was very, very big loss
for us.

Speaker 2 (20:34):
Yeah, I'm so sorry. Well, thanks for much.

Speaker 1 (20:38):
Thank you. Well, yep, thanks for Colin. Have a good day,
all right. Well, appreciate that call. And you know, it
is one of those things that maybe you know you
never planned for, but sometimes it does happen. And you know,
I think after the break, which is coming up in
just a few minutes, you know, we will talk a
little bit about what happens when you go through a
transition in life like that, and you know, how do

(20:59):
you navigate that financially when, of course there's a lot
of other things going on as part of it as well.
You know, before we come to the end of the hour,
we were talking a little bit about midyear review, how
do you check in? And one important element to that
is budgeting. You know, I know that it's probably a
cringey word for a lot of people. You know, I
think when I talk with clients, a lot of people

(21:20):
really hate it. And you know, they don't have an
antie at what they spend. They know that they have
more coming in than is going out, and that's, you know,
what they really focus on. But budgeting is really important.
Not only is it a great exercise to stay in
control of your personal finances and make sure you're on
track right, you're you're saving the way you're planned to
and all that, but it's a really key piece to

(21:41):
retirement planning. So if you're working with a financial planner
and maybe you're you know, nearing retirement, you're sitting down
to start that planning discussion. You know, how am I
going to retire? One of the most important things that
plan is going to ask you is what are you spending?
They you would not believe how many folks come to
us and they have no idea how much they're spending.
Right They maybe it's a married cup and one has

(22:01):
one idea, another has another idea of how much goes
out each month and cash flow, and even though they
don't have any idea, they want to know if they
can retire, and that question is not answerable without knowing
what you want to spend in retirement. You know, almost
any portfolio balance can work depending on what you're willing
to spend and able to spend, and that is a
really key piece to it. So starting that process to

(22:23):
budgeting is really important to your planning. Even if you're
a little ways down the road from retirement, it's still
a great thing to do. It's going to give you
that control, put you in the driver's seat of your
financial life, and it helps you get more granular with
it and see, Okay, you know, I have this much
that goes towards my discretionary spending. So this is money
that I could divert somewhere else or not spend if

(22:45):
I needed to, versus the other portion where I have
to you know, pay my mortgage, I have to you know,
buy grocery, they have to pay for insurance and those
things that can't that are not negotiable and doing all that.
So it is a really good thing. There's apps out there,
I'm gonna be honest, I tried a lot of them.
I have not found one that I can wholeheartedly recommend.
They're all okay from my perspective, but I haven't found

(23:06):
what I love spreadsheets. I am a spreadsheet person, so
you know that is a good option too for those
who like it. You can bind tools online, you can
make your own. But regardless of what way is best
for you, you know, I do think that it is
an important thing, and just to set something up. You know,
once you get the system going, you're going to be
able to update it every month, every couple months pretty quickly,

(23:29):
and it won't take as much time. But just to
even have a handle, not even to necessarily limit yourself,
but just to have a handle on how much you
really are spending is so important. We are coming down
to the bottom of the half here and so we're
going to take a quick break, but don't go away.
We'll be back with more. You're listening to Let's Talk Money,

(23:50):
brought to you by a Bouchet financial group, where we
help our clients prioritize their health while we manage their
wealth for life. We're going to take a quick break
for the news and we'll be back with more right
here on WGY. Don't go anywhere. Hi there, this is
Harmony Wagner. Thank you for staying with me through the break.
It's been great half first half of the show so far,

(24:12):
and I'm looking forward to a second half focusing on
some more financial planning topics and maybe some really actionable
steps that you can take to protect yourself and the
people that you love. If you have any questions, please
feel free to call in. The number is one eight
hundred talk WGY. That's one eight hundred eight two five
five nine four nine, And you can also send an

(24:33):
email question if you prefer to ask. That's ask Bouche
bo U C. H. E. Y at Bouchet dot com.
And I'm actually going to take an email question right now.
This question comes from Christina, who is a loyal listener.
Thank you Christina, and her question is asking whether there's
a way to invest money for grandchildren and she had

(24:53):
talked about possibly opening a Schwab account, making them the
beneficiary and just investing in a low cost broad market
index fun and reinvesting dividends and she's looking for for
assistance with that. Well, great question. I absolutely love this question.
You know, I have three kids on my own. We
talk to clients who have children, grandchildren, and it is

(25:15):
just such a great way to set them up for success.
In the future by you know, investing money for them
and as they get to a certain age, starting to
have those conversations with them about how to manage it.
And so this is a wonderful question. You know, when
I talk with with clients about this, it really depends
a little bit on your individual goals and concerns. So

(25:38):
there's you know, three different types of ways that we
often recommend you save for children. And one of those
ways is to open a brokerage account that's in your name,
but they has them as the beneficiary. So something happens
to you, it's going to go to that child. You
can do one for each you know, each individual that
you'd like to save for, whether it's a child, grandchild, niece, nephew,

(26:00):
whatever it might be. You can also if that beneficiary
is a minor, then you can name a successor custodian
who would handle that money until they reach the age
of majority. So it wouldn't just something happened to you.
It's not going to go to them if they're eight
years old, it's going to be managed by another adults
you know, maybe their parent or you know, another trusted person.

(26:20):
So that is one way to do it. There's really
no tax advantage to doing so, besides the fact that
any brokerage account typically if you hold things long term,
it's eligible for a long term capital gain treatment on
realized gains, meaning on much better tax rate. So long
term capital gains range from zero percent to twenty percent.
For most people, that are fifteen percent. That's really the

(26:43):
widest bracket that most people fall into if you're not
super low or super high income. So that's better than
ordinary income brackets, which you know, maybe is the average
is closer to twenty two percent for most people, So
that is a tax benefit. But besides that, you're not
going to get any deduction for putting into it. It's
not going to grow tax for you or anything like that.
But it's very flexible, so that type of account can

(27:04):
go to anything. If you want to help them with
their first car, if you want to save it until
they start, you know, looking for a home, and they
you can put down towards the down payment that you
have the flexibility to do that in a brokerage account,
which is really nice. You also have total control over
it because the child does not own it in any way.
They are just going to inherit it. When you're no
longer with us, so you have control and you if

(27:26):
you're if they turn twenty one and you're like this,
this individual is not quite ready to you know, get
their hands on a chunk of change, then you keep
it and you still oversee how it's invested and how
it's used. So that is one thing that we do
talk about. Another option is a five to twenty nine plan.
So you know, we talked about them a lot on
the show. You've probably been familiar with them, but they

(27:47):
are really a tax advantaged account that is meant to
be saved towards educational expenses. Now, as time goes on,
you know, I used to hear, you know, back almost
ten years ago, now people being very concerned about you know,
what if we don't use it, what if a child
doesn't go to college, what if you know, they go
to college but they have a scholarship. And I would
say as time goes on, these are getting less and

(28:09):
less restrictive in that more legislation is getting passed that
allows them to be used in different ways. So five
twenty nine plans are for educational expenses that can cover
a lot of things, that could cover books, that could
cover equipment that tuition. Of course, they also are not
just for a four year school, right, so you can
use it for college, you can use it for grad school,

(28:29):
you can use it for trade school, which is really
interesting to many people. And you can also use it
for private school, you know, pre college so you know,
elementary secondary. If it's a private school that has tuition,
you can you can use it towards that as well,
up to a limit of ten thousand dollars per year,
I believe, and that does depend by state a little bit.
The benefits to having this account is that when you

(28:53):
put money in, you get a tax deduction. In New
York State, you get tax deduction for a five thousand
per person, so couple can deduct as much as ten
thousand from their New York state income tax only not federal,
so you know, maybe you're saving you know, five hundred
and six hundred bucks in taxes if you do the
full amount for a married couple at ten thousand. So
that's nice. But the real more powerful tax benefit of

(29:16):
it is that the funds grow tax free, and they
come out tax free as long as they are being
used for qualified educational expenses. So if you start saving
when a child is born or very young, you know,
that's many years of tax free growth that they will
get to use towards their education. And you know, whatever fashion,
whatever education may decide to pursue, you know, typically is covered.

(29:40):
So that is a real benefit. They're also now is
its option. It's it's very new, but it's the five
twenty nine to roth rollover. And so if you find
that either that person you were saving ford never went
to any kind of school that cost them anything, right,
and if they went to public school and then just
you know, decided to enter the workforce, at that point
you can convert up to third five thousand total two

(30:02):
are WROTH for that person. So you really start the
clock for the early on ROTH savings for them. And
you know there there are some you know rules around that,
but you know, just generally speaking, it is a great
benefit for you know, unused five twenty nine funds. So
if you're worried about the restrictive nature of it, you know,
I go into all that detail to say it is

(30:23):
opening up quite a bit in terms of what you
can use it four and some other ways to use it.
You also can change you to another beneficiary if you like,
so let's say you have three grandkids and the oldest
one decides not to pursue any kind of education beyond
high school. You can transfer that beneficiary to maybe one
of the younger to that that is going to do that,
so you can you know that the odds of that
money being lost or you having to take it out

(30:44):
at a penalty or something are are much lower now
with all the options that are available. So we talked
about a brokerage account, we talked about five twenty nine.
The third option is what's called UTMA account or UTMA
also you might see ug UGMA. Those stands for Uniform
Transferred to Minors Act or Uniform Gift to Miners Act.

(31:06):
And that is really a custodial account. So it's similar
to the brokerage account, where it's you know, it can
be invested, it is not going to be required to
be used only for education, more flexible in nature for
what the distributions can go towards. When the child is
really an account owner on it. Right, So while they're
a minor, the custodian, probably you, or maybe their parent

(31:29):
or other trusted person is handling it, is coordinating any
distributions for that child's benefit and is overseeing everything, so
the child does not have any control over it. But
as soon as they reach the age of majority in
New York that is age twenty one, many states it's
twenty one, that account will automatically flip to just a

(31:51):
brokerage account in that child's name. So for some folks,
you know, some kids have a really good head on
their shoulders, very responsible. That works totally fine, and they're
going to use it for you know, good purposes or
keep it invested, and they kind of they understand how
it works. But not everyone, right, I even think back
to myself at twenty one, I don't know how I
would have you been prepared to handle something like that.

(32:12):
And so it is a potential risk that you know,
at that on that magic birthday, all that money is
going to just belong to that that child to use
for whatever he or she pleases. So that is a
potential downside that in my experience, does deter a lot
of parents and grandparents from using that kind of account.
The only real draw to it is that there is

(32:33):
a tax benefit, so instead of parents, you know, if
they have an investment account and their child's just the beneficiary.
But they're not on the account at all. You know,
the parents are paying at their tax rate. There is
some tax advantage where you know, you have you pay
at the child's tax rate up to a certain point
on the on the utm A or UTMA account, so
a slight tax advantage. But you know, especially if you're

(32:54):
saving for a very young grandchild or child, it could
be really difficult to know what that person is going
to be like at twenty one when the funds belong
to them, and so you know, it is a little
bit of a risk something to be aware of. So
what I find more often is that we do recommend
people using the five twenty nines. And you know, if
for some reason they have a hesitation or they've already
contributed maybe ten thousand for that year and they don't

(33:16):
want to do anymore because they're not getting a tax
deduction anymore, then maybe the Schwab investment account is a
great idea. And I love Christina's proposal of just buying
a very low cost index fund that's diversified and you know,
just letting it grow over that child's lifetime. I think
that that makes a lot of sense. So that was
a very long answer to your question, Christina, I hope

(33:37):
you found it helpful, and you know, please feel free
to email or call with any any further follow ups.
But it is a complicated thing to think about, right.
There's a lot of different factors. You know, what the
funds are going to be used for and when that
child might be able to manage it in a prudent way,
and the taxes, so there's a lot of different things
that go into the decision, and sometimes the combination of

(33:59):
the approach of that is the best approach. If anyone
does want to open the five point nine accounts, the
best place to do that is on New York saves
dot gov. That is the vanguard platform that will allow
you'd open it right online. That's what I've done for
by kids, and it is very easy. You can fund
it from there, excuse me, new York saves dot org

(34:21):
and that that is the best place to open them
and start that funding and start that tax free growth
for your child's education. All right, We're going to take
a quick break here, but we'll be right back with more.
Let's talk money on WGY. Don't go anywhere. Hi there, everyone,
Thanks for staying with being through that brief break. My
name's Harmony Wagner. I'm a wealth advisor at Bouchet Financial Group,

(34:42):
and I have the pleasure of coming to you live
on this rainy Saturday morning. Although I think I did
here on the weather report in the news break that
we might see some sun and at least dry weather tomorrow,
So fingers crossed that we do get to enjoy at
least a little bit of our weekend. One thing I
want to chat a little bit is uh, transitions that
people go through in life that really have financial impacts

(35:05):
or things to consider financially. A lot of people come
to us, and not just us, but a lot of
people seek out financial advisors in general when they're going
through a life transition of some kind or when they're
approaching one that could be a career change. Retirement, of
course is a really big one. It can be a
divorce or the loss of a spouse, a spouse passing away.

(35:27):
There are so many different things that really prompt someone
to seek professional advice with their finances. So you know,
one thing I thought I talked about first is, you know,
a career change. Maybe maybe it's stopping work altogether, or
maybe it's just transitioning to something else, something new, And
there's a few things, of course you want to consider.

(35:49):
The first is you know, what financial ties do you
have to that that previous employer. Typically it's a four
oh one K or four or three P. Sometimes there
are also things like stock options, employee stock purchase plans
or employee stock option plans, some of the more complex
retirement savings, or you know, incentive compensation packages that you

(36:11):
might have. You really want to start handling those things
as soon as you can. You know, if you think
about it, no matter matter if you like that company
or not, you're not going to want to leave your
funds there forever. So whether it's now or down the
row when you're retire or down the road when you're
starting to think about, you know, leaving money behind to
your airrs, you're going to want to have that money
rolled out of the four oh one K. And there

(36:32):
is no better time to do that than as soon
as you can. It is only going to get more
difficult to connect with that company to you know, get
the right name of the person at HR that you
need to reach out to. So when you first separate
from service without a previous employer, that is the best
time to do that. What are your options with the
four oh one K rollover? You have a couple You

(36:53):
could leave it there, you know, as I just talked about,
usually you don't want to do that because it just
become harder to access it over time, as the company
can change, the plan can change, you know, where it's held.
You know, a lot of the things can happen that
would make it more difficult to access your money. But
you can choose to leave it there if you choose
to the one thing, the one caveat I will say,

(37:15):
there are not many benefits to leaving a four ok
one K where it is. The only one is that
let's say you're retiring and you are not yet fifty
nine and a half. So fifty nine and a half
is that magic age that the IRS said you can
tap into your iras and your retirement accounts without getting
an early withdrawal penalty. Well, if you retire from a
company and eive a four oh one K there, that

(37:37):
age is actually fifty five. So if you're between those ages,
or you know, even if you're younger than fifty five,
but you know you're going to hit that before you
hit fifty nine and a half, I guarantee it you.
You may want to leave even just a portion in
the four oh one K for accessibility purposes, saying, Okay,
if I need to tap some money before I'm fifty
nine and a half, if I roll all this money
into an IRA, well that pushes my access point out.

(38:01):
If you leave some in the four oh one K,
you can get to that at age fifty five penalty free.
So that is one disclaimer I will through out there
something to consider, especially if you're an early retiree not
yet at that age fifty nine and a half and
you might need to access some money, that's something to
think about. But besides that that is not the case,
so you feel it's unlikely to be the case, then
you may want to look into, you know, taking out

(38:22):
of that four oh one K plan. Typically people will
do a rollover to a traditional IRA, so they might
open one. Maybe they have an advisor they already you know,
kind of have an IRA establish it's been collecting all
their four oh one K rollovers throughout their career as
they change jobs. Maybe you don't, maybe you open one
for the first time. You know, once you do that,

(38:42):
you're going to be in charge of managing it right,
and you're going to have the universe of investment options
available to you. So in a four oh one K
you typically have maybe twenty five thirty different options, which
is not a lot, but that can help someone who
maybe isn't very investment savvy, doesn't have the time or
the desire to really do a lot of search. It
can be nice to have just a few options selected

(39:03):
for you. Makes it easy to you know, do diversified
funds and just kind of keep things simple. Albeit you
don't have any control over what those funds are or
the fees that they contain. But once you roll it
over to the IRA, you have full control, which is great,
but then you also have full responsibility and that is
a lot of time when a lot of folks do
engage you advisor because they realize, Okay, this is something

(39:25):
that's a little bit beyond me, I'd like to seek
some professional help on this. So that's something to think about,
especially if you are rolling into an IRA. Who's going
to manage it? Are you going to? Is it time
to you know, seek someone out, or maybe you're already
working with someone that you want to contact and have
help you with this. The other option you could do
is take a distribution. And again this is not something
I see people do most often, particularly if they are

(39:48):
you know, too young to access these funds where they'd
be penalized, then you typically don't want to do it.
And especially if they're going to a new job then
you know, hopefully you'd have the cash flow from that
new position to not need to access it. But it
is an option and something that would be on the
paperwork that you're filling out for the rollover, so you know,
something just to be aware of. So, like I said,
typically you do an IRAY rollover, you know, I would

(40:10):
say in ninety five percent of cases or maybe even more.
That's that's what I see people do, and it's good
to handle that right away. Usually you just contact your HR,
or you can even call the institution. If the four
one K is at Buya or Empower or CIA, you're
going to call them. You're going to say, hey, I'd
like to do a rollover to an IRA at child

(40:31):
Schwap and they will give you the paperwork and tell
you the process to complete. And so that's one thing
to think about. Another thing to think about, especially if
you're not going to a new job right away? Is
you know, is there going to be a gap in benefits? Right?
Is there going to be a gap in healthcare? What
are you going to do about that? Are you going
to use cobra and you know, continue with the healthcare

(40:54):
that you had at your employer, but now you're paying
the full full bill for that, and that can be
one option you know, you can you may potentially seek
health care on the private exchange there. You may be
going to a new job and you're going to qualify
for health care there. But it's good to think about
how am I going to cover this need for myself,

(41:15):
my spouse, my family, whoever is on your plan. And
if there's a gap there, there could also be a
gap in other benefits. Right. So maybe you were saving
into your four oh one K religiously at your previous
job now that you're changing. Sometimes there is an eligibility
period where you're not eligible to contribute to the four
oh one K for maybe six months or some other timeframe,

(41:35):
So you know, how are you going to make sure
that you're still able to hit your savings goals? Right?
So maybe it just means diverting some extra cash to
a brokerage account. You may be eligible to save into
a traditional IRA or a roth IRA outside of any employer,
just something personal that you have on your own. There's
you know, pretty stringent regulations about how much an income

(41:57):
you have to have, but then you can't have too
much in order to be eligible for all this, so
you know, it's worth looking into with an advisor. But
if you don't want to be derailed from your savings
for the year, even though you might have to take
a six month or twelve month break from four oh
one K contributions, it is a good idea to look into.
You know what those options would be and how you're

(42:18):
going to keep keep your savings going. So there's some
really important things to think about as you do it.
Go through a job change, you know, making sure that
the financial elements of that are are coordinated. Another major
transition that people often go through is the loss of
a spouse. And it's especially tragic when we see someone

(42:42):
who maybe they were not involved very much in the
financial side of things, and their spouse handled everything, and
now that person passed away, and not only are they
of course going through the emotional complex grieving process in
their heart, but they also have to handle the finances
and they may feel very low in that arena. That

(43:02):
is a time when people may seek a financial advisor
or they might even seek to change right. Perhaps there's
spouse who passed had a relationship with their advisor, but
the surviving spouse never did, and so they don't feel
comfortable to me working with that person. They're going to
go and they're going to try to find someone that
they are comfortable with that that can guide them through it.
And one thing I will say that if you're listening

(43:23):
and you're married, or you have a long term partner
where you share finances as a household, if you're the
financial quarterback in your relationship, please please please take actions
now to set up the person you love for success.
If something happened to you, it can be difficult. I
know a lot of people say, I try to involve
my wife and my husband, they don't even want to
talk about it. Have those conversations, you know, it can

(43:47):
be awkward, it can be difficult, but it's so much
less awkward and difficult than that person trying to navigate
a world they know nothing about when you're not there anymore.
So have conversations about where everything is. Write everything down.
You know a lot of people have a binder or
an electronic file folder where they have, you know, statements,
information about where all the assets are located. Who to

(44:09):
call right. We always tell our clients put our name down, right,
if you're putting together something for your beneficiaries to have
after you're gone, put our name down. If they call us,
we can guide them through through so much of it
and take a lot of that stress off of them.
So that is a really important element to it. As well.
Establish a relationship with an advisor who can guide your

(44:32):
spouse or partner in your absence and make sure that
they are really comfortable with that person too. You know,
like I said, it's oftentimes we have a relationship. You know,
people have relationship with only one spouse and the other
one is disengaged from it. But at some point, you know,
the odds are that you don't need to know about
the finances that need to handle that. So that can
be really really key is to have that shared relationship

(44:55):
with your financial advice or someone that you both trust,
someone that you both can call and and you know
who can walk you through the difficult times in life.
Another kind of logistical thing to do, which we've talked
about a little bit already, but it's consolidating accounts. If
you have four one ks all over the place from
you know, a whole career with you know, several different jobs,

(45:16):
and a stock account over here at computer Shares, and
then a brokerage account at e Trade and that, you know,
all over the place, that's just that many more accounts
for someone to handle down the road, and so it
can be difficult. It's hard to maintain beneficiaries on all
of them sometimes and just to have that many places
to call, that many sets of paperwork to complete can

(45:39):
be a lot. So wherever possible, try to consolidate those accounts.
You know, most people should have one IRA, one roth IRA,
maybe a four to one K if they're still working
just with their current employer, and then a brokerage account.
Typically you don't need much more than that. You know,
there's not many reasons why someone would need ten brokerage
accounts at all different financial institutions. So you know, as

(46:01):
you're thinking about the people you love and them having
to handle your estate sometime hopefully very far down the road,
but at some point it will happen, and especially like
I said, if there's someone that's going to have to
handle it that's not as financially savvy. Consoliding accounts can
be a really big thing that you can do. One
thing I learned about recently. I was attending in a
state planning session and I did this for the first

(46:23):
time this week, so wanted to share it with our
listening audience. But it's to set up a legacy contact
in your phone, someone who can access your phone if
you were not with us anymore, so that they can
get to the data that they need to on your device.
So much of our lives is on our phones now,
and so it is a really important thing. So at

(46:44):
least for iPhone users, it's very simple. I'm guessing it's
something similar for androids. But you just go to the
settings on your phone at the top. You can go
to your name and then go to sign it in security,
and there's an option there to set up a legacy contact.
You can pick that person. It'll send them an access
code so that if ever something happened to you and
they needed to access your device, they'd be able to.

(47:06):
So of course, usually it'd be your spouse if you
have one, could be a sibling or even you know,
very good friend or child, adult child, if you have
someone who's handling that for you. So something very quick
you can do, you could probably do it before this
broadcast ends, is to go and set out that legacy
contact in your phone. If you're looking for a very
quick step that you could do to protect the people

(47:27):
that you love, that that's a good one. And I
just did it, like I said, for the first time
this week, so I'm right right there with you. I
didn't even know about it beforehand. So it's always good
to be thinking about this, although it can be a
hard topic to think about, but you know, ultimately it
comes down to taking care of those really important people
and making their life as easy as possible in the future,

(47:48):
and then that's a really key piece to it. Well,
thank you so much everyone for tuning in for today's show.
I hope you got something valuable or at least interesting
out of the conversation today, and I certainly enjoyed spending
this hour with you. We'll be right back here on
WGY tomorrow at eight am with more Let's Talk Money,
brought to you by Bouchet Financial Group, where we help
our clients prioritize their health, while we manage their health,

(48:10):
their wealth for life. Stay safe, everybody, have a great
weekend and fingers crossed for some sun tomorrow. Take care,